Why Stephen Harper loves his deficit

Stephen Harper has one more shot at a majority. He must be salivating at the chance to radically restructure the role of government in Canada. But winning over voters usually requires new campaign promises. Harper does not want to expand government programs for regular folks: his endgame is to downsize what we expect our government to do for us.

How can Harper win a majority without promising much to address the needs of Canadians? The Harper spin machine is counting on Canadian's fear of the federal deficit to manage this tricky problem.

Since the 1990s Canadians have been persuaded that federal budget deficits, and rising federal debt, are the end of the world as we know it. Actually, it is not nearly as cataclysmic as deficit doomsayers would have you believe.

The government's projected deficit for the 2010/2011 fiscal year is $45.4 billion. It looks like a big number, but deficits should be judged by how big they are relative to the economy (gross domestic product). A billion-dollar deficit is a much bigger problem for a tiny poor country than for an economic superpower.

The International Monetary Fund recently compared deficit/GDP across countries. The IMF projects that Canada's 2011 deficit will be 4.7 per cent of GDP. The USA comes in at 10.8 per cent. Advanced countries as a group average 7.1 per cent.

Not that we should be blasé about deficits: deficits add to federal debt, and the interest payments on the debt are paid out of tax dollars (although with interest rates low, this is not the problem it was in the 1980s). Even so, at this point the deficit is not the monster that is coming to eat your children.

It is obvious that Harper is not too upset when it comes to the deficit. Despite his claims to be a fiscal conservative, he cannot give away money fast enough in corporate tax cuts or military spending. Parliament can't even get a straight answer out of him about the price tag of his anti-crime campaign or his F35 fighter jets. I guess that standards of fiscal accountability and transparency only apply when Stephen says they should.

Harper wants to spend freely on his political agenda, while having an excuse for refusing to implement the sorts of government programs that would make a real difference for Canadians who are struggling after the latest economic downturn. Better yet, he wants to portray his refusal to help Canadians in need as a virtue.

To deflate Canadians' expectations about what the government should do for us, the Harper spin-machine is relying on some pretty intense political theatre concerning the deficit. Harper wrings his hands about the government's fiscal position any time that Canadians might want action on issues like job creation, poverty, healthcare or the environment. The sell-job is that Harper is such a prudent economic manager that he couldn't possibly give in to pressure to jeopardize the country's finances, much as he might feel our pain. Of course, the Harperites must work overtime to avoid explaining how much cash is hemorrhaging from the Treasury to pay for their pet projects.

This strategy is calibrated to play on our economic anxieties. After all, the deficit does look like a scary number, particular to Canadians who are squeezed by their personal indebtedness. But even though you are struggling to make ends meet, the Harper team would have you think that you are being down-right unpatriotic to expect the government to do something for you while there is a federal deficit. Valiant Stephen Harper must say no to Canadians for our own good.

The PR campaign to exalt Harper as a good manager of the economy is adopting strategy straight from Ronald Reagan's playbook. The Conservatives recent feel-good ads are shockingly reminiscent of Reagan's 1984 "Morning in America" campaign: similar soothing instrumental music and warm-and-fuzzy camera shots of our fearless leader/good daddy benevolently watching out for the common good.

Like Reagan's ads, these images are calculated to lull us into the feeling that we can relax with Harper at the economic helm. Never mind that Harper, like Reagan, is claiming to be a fiscal conservative while racking up deficits on military spending, prisons and tax cuts. And once he gets the reigns of real power, Harper (and Reagan before him) will invoke fear about the deficit to justify slashing spending on programs that actually help those who are struggling in a tough economy.

The Reagan strategy became so influential in conservative circles that it had a name: "starve the beast." The small government lobby recognizes that it is politically unpopular to trash popular government programs (i.e. "the beast"), so it has to attack them indirectly by starving the government of funds. Deficits provide the perfect political justification for getting out the axe. Once we all become deficit-phobic, the electorate can be more easily persuaded to diminish their expectations about what government ought to do for us.

Of course, Harper will need to get a firm hand on power before he uses the pretext of concern over the deficit to really slash government spending. Expect him to be mysterious about just how he plans to fulfill his plans to eliminate the deficit after the next election is over. He will do everything possible to appear moderate until he has his majority.

The upcoming budget is Harper's chance to proclaim his credentials as a prudent economic steward. After all, what's a few billion dollars here or there on some fighter jets or prisons! While he is convincing us that he is someone we can trust with the purse strings, he will probably even announce his intention to pursue some positive-sounding measures just to show us he really is a swell guy. Just give him his majority, and good stuff will be coming down the road sometime.

If Harper was such a principled economic manager, he would start with some fiscal transparency. Just how much are your pet projects going to cost, Mr. Harper? And just how are you planning to balance the budget in the future? Canadians deserve plausible answers to these basic questions.

We need a mature debate about the deficit, debt and the merits of tax cuts versus other uses of government fiscal capacity. This debate cannot happen amidst infantilizing fear-mongering about the deficit. As long as the deficit morphs into the monster that silences all rationale conversation about federal finances, our deficit phobia will be exploited to the advantage of Harper's political agenda.

Economist Ellen Russell is a research associate with the Canadian Centre of Policy Alternatives. Her column comes out monthly in rabble.ca.

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